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Kenji Okamura
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March 1, 2023
Washington, DC: The Executive Board of the International Monetary Fund (IMF) today approved a disbursement of SDR 86.1 million (about US$114.8 million) under the Food Shock Window of the Rapid Credit Facility (RCF) to help South Sudan address urgent balance of payment needs arising from heightened food insecurity. Four consecutive years of intense flooding and the fallout from Russia’s war in Ukraine, on the heels of the COVID-19 pandemic, have exacerbated an already-dire humanitarian situation in South Sudan. A combination of flooding and the rising price of staples have exposed 8.3 million people (about two-thirds of the population) to acute food insecurity. The disbursement is expected to provide South Sudan with fiscal space to address food insecurity while maintaining social and growth-enhancing spending as well as boosting reserves.
The authorities are committed to using resources transparently and intend to channel US$20 million of the disbursement through the existing systems of trusted development partners to provide immediate humanitarian assistance that addresses food insecurity. Transparency in the use of the portion of the disbursement made available to the budget will be ensured through regular reports and an audit, which will be published.
The authorities also requested a Staff-Monitored Program and Program Monitoring with Board (PMB) involvement to build a track record of policy implementation, possibly paving the way to an IMF-supported Upper Credit Tranche (UCT)-quality program. The Board and Management welcomed the steady steps the authorities have taken since the Article IV Consultation in July 2022 to stabilize the economy, clear domestic salary arrears, mobilize additional non-oil revenue, and increase the transparency of public finances by publishing budget execution reports, oil revenue data, and the results of an independent stock-take of South Sudan’s external debts. The PMB will guide policies that safeguard macroeconomic stability, ensure debt sustainability and provide a framework for the authorities to deepen and broaden public financial management (PFM) and governance reforms. The PMB also sets targets to safeguard priority social spending and public sector salaries.
Following the Executive Board’s discussion, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair, issued the following statement:
“Over the last three years, South Sudan has had to contend with overlapping economic shocks from COVID-19, historic flooding, and Russia’s war in Ukraine, which have compounded an already-difficult economic and humanitarian situation driven by weak economic management and institutions. Performance under the Staff-Monitored Program was mixed but recent corrective actions have been taken. Looking ahead, emergency financial assistance under the Rapid Credit Facility’s new food shock window will help address urgent balance-of-payments needs and mitigate the impact of elevated food prices. The authorities’ commitment to work with international partners to ensure that part of the disbursement will provide immediate humanitarian assistance to address food insecurity is welcome.
“The authorities have taken determined steps since the recent months to restore fiscal discipline and rein in monetary growth. Ensuring macroeconomic stability and debt sustainability in the near term will require closing the large fiscal gap remaining in the current fiscal year and pursuing a prudent monetary policy, including sustainably bolstering international reserves. However, the needed fiscal adjustment should protect spending on health, education and social support, especially to the most vulnerable. Refraining from further monetary financing and non-concessional borrowing is important.
“The proposed policy framework under the Staff-Monitored Program approved by Management is sufficiently robust to meet the authorities’ objectives, and its steadfast implementation could build a track record to pave the way toward a possible future Upper Credit Tranche (UCT) quality program supported by a Fund arrangement.
“South Sudan’s new Staff-Monitored Program will benefit from limited Board involvement given the significant support provided to the country by international donors, as well as the authorities’ stated intention to deepen relations with the international community by advancing macroeconomic and governance reforms.
“Continued progress on public financial management and governance reforms is essential to foster robust and inclusive growth and raise credibility with domestic and international stakeholders. This includes increased oil-sector transparency, strengthening the debt management framework and expenditure controls, regular reporting on debt and fiscal operations, and determined steps to operationalize the AML/CFT framework. Swiftly addressing the findings from the audits of the two previous RCF disbursements and decisively implementing the recommendations of the 2021 safeguards assessment remain important.
“Continued implementation of the peace process is a priority for South Sudan’s economic and social development. The authorities are highly encouraged to continue working with the international community and civil society to promote peace, stability, and national reconciliation.”
Table 1. Republic of South Sudan: Selected Economic Indicators, 2019–27
2019/20
2020/21
2021/22
2022/23
2023/24
2024/25
2025/26
2026/27
Act.
Act.
Projections
Output, prices, and exchange rate
Real GDP growth
12.9
-4.9
-2.9
-0.4
4.6
4.8
5.1
5.2
Non-oil
0.5
-11.6
6.0
7.3
7.1
7.5
8.4
8.3
Prices
Inflation (%)
33.6
43.5
0.9
16.5
10.9
9.8
8.5
8.4
Central government budget
Revenue (%GDP)
29.5
34.5
30.1
31.5
30.8
30.5
29.4
28.3
Of which : Grants
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Of which : Oil
25.5
29.8
27.4
28.5
27.2
26.5
25.0
23.6
Expenditures (% GDP)
39.4
38.2
36.7
28.5
23.9
23.2
22.7
24.1
Fiscal balance (% GDP)
-9.9
-3.7
-6.6
3.0
6.8
7.3
6.6
4.2
Non-oil 2:
-19.4
-20.8
-27.2
-19.8
-14.6
-13.3
-12.6
-14.3
Public debt (% GDP)
56.2
64.2
53.8
46.4
45.3
42.1
37.0
34.1
Balance of payments
Current account (% GDP)
-19.7
-4.9
-1.4
7.0
6.6
6.4
4.3
1.0
FDI (% GDP)
0.1
0.1
0.1
0.1
0.4
0.4
0.3
0.4
Reserves (in months of imports)
0.4
0.4
0.4
0.5
0.7
1.0
1.1
1.2
External debt (% GDP)
40.3
46.3
41.1
35.0
34.6
32.0
27.8
25.5
Sources: South Sudanese authorities; and IMF staff estimates and projections.
1 The fiscal year runs from July to June.
2 Non-oil revenue excluding grants minus domestically-financed current expenditure minus transfers to Sudan (including pipeline fees)
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